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Hydro-Québec reports ‘softest first quarter in 10 years’

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Hydro-Québec reports ‘softest first quarter in 10 years’
(photo courtesy Hydro-Quebec)

Hydro-Québec has posted net profit of $1,576 million for the first three months of 2024, down $655 million compared to the same quarter last year due to the reduction in exports and mild temperatures of winter 2024.

“The results for the first quarter of 2024 are in line with our projections and are a continuation of the context of low hydraulicity experienced by Hydro-Québec last year,” said Maxime Aucoin, executive vice president – strategies and finance. “Indeed, even if the marked drop in water supplies to our large reservoirs in northern Quebec during the second half of 2023 has no impact on Quebec’s energy supply, its impact is still being felt this year on our exports of electricity. To ensure proper management of our resources, we continued to limit our sales in short-term markets during the first quarter, which contributed to the decrease in net profit compared to last year.”

For the same period in 2023, Hydro-Québec recorded a record profit of $2,231 million, while the average prices obtained on export markets had reached unprecedented levels.

Hydro-Québec generates, transmits and distributes electricity. It is Canada’s largest electricity producer and one of the largest hydroelectric producers in the world, sourcing most of its electricity supply from hydroelectric generating stations. Its sole shareholder is the Quebec government.

Some reported highlights from the first quarter of 2024 include a 25% increase in investments in tangible and intangible assets compared to the same period last year, nearly $1.1 billion invested in three months, and carrying out financing activities to raise $1.5 billion in the first quarter.

In the context of low hydraulicity causing a reduction in exports, the utility said it experienced a $793 million drop in sales outside Quebec due to a 5.2 TWh decline in exported volume compared to the same period last year. Revenue was $446 million for 4.2 TWh of exports.

The company reported the favorable impact of the hedging strategy, but less significant than in 2023. The average price obtained (including the effect of hedging) was 10.6¢/kWh, compared to 13.2¢/kWh in the first quarter of last year. Average market price was 7.1¢/kWh, compared to 6.3¢/kWh for the same period in 2023.

Within Quebec, the company experienced growth in demand for electricity in the residential and commercial sectors.

In its Action Plan 2035 – Towards a Decarbonized and Prosperous Québec, released in November 2023, the company estimated it will need an additional 150 to 200 TWh to meet electricity demand in Québec by 2050. That’s double the electricity consumed today. To handle this growth, the utility will need an additional 60 TWh by 2035, which means adding 8,000 MW to 9,000 MW of capacity. Of this increase, 75% will be used to decarbonize Quebecers’ consumption, while 25% will be used to support economic growth, particularly in industrial sectors involved in the energy transition.